Trade players accounted for 95% of mid-market business services deals in the half year to 30 June 2019. Horizontal integration of companies is a common theme as trade buyers seek to enter new geographical or ancillary markets through acquiring an established market share rather than through pursuing organic strategies.
Volution’s recent purchase of Ventair for $27m is a great example. The acquisition of Ventair allows Volution to penetrate new markets for its ventilation products, and creates a stronger product offering to the existing Australian and New Zealand markets.
The fragmentation of competing companies within business services segments has seen market consolidation become a pertinent factor behind the uptick in deals. By targeting and acquiring medium size, well-established competitors, businesses can improve growth opportunities and margins while also improving capability in their own operations.
We have also seen this strategy consistently deployed within the training and education industry. A recent example is Janison Education Group Limited acquiring Language & Testing Consultants Pty Ltd for $15m (including earnouts).
Other notable trade transactions in the sector in the first half of 2019 include:
Australia’s second largest funeral services home Propel Funeral Partners completing the acquisition of Morleys Funerals Pty Ltd for $14m.
Coventry Group Limited acquiring Nubco Pty Ltd for $36m.
Pitcher Partners has an experienced team of specialists that can assist you with any inbound or outbound transactions between your own territory and Australia, including advising on the international taxation and structural implications. Do not hesitate to contact us if you would like to discuss your own situation.
Wilson & Bradley
Divestment to Julius Blum GmbH
Established in 1976, Wilson & Bradley Pty Ltd distributes and supplies a range of kitchen and cabinet hardware to the kitchen and cabinetmaking industry within Australia. The family-owned and operated business, headquartered in Melbourne, employs over 90 staff via a national footprint of branches in Melbourne, Sydney, Brisbane, Perth and Adelaide. The second generation of the Wilson family approached Pitcher Partners, looking to realise the investment they had made in the business over the prior four decades.
Wilson & Bradley presented a unique opportunity as one of two distributors for Austrian kitchen and cabinet fittings manufacturer Julius Blum GmbH products in the Australian market. The corporate finance team were able to strategically present the acquisition to Julius Blum GmbH as an opportunity to solidify their route to market in the region, a rationale which was well received by the purchaser.
The acquisition of Wilson & Bradley was completed by Julius Blum GmbH in May 2019, with the Pitcher Partners corporate finance team providing support throughout the process. This included on-site support of negotiations in Austria and ensuring full value was preserved throughout the due diligence process.
“We engaged Pitcher Partners to lead us through the sale process for our family business to Australian headquartered Julius Blum GmbH. What impressed us about Pitcher Partners was their seamless teamwork and one firm approach. We engaged with several partners and staff of Pitcher Partners throughout the sales process and the quality of service and technical expertise was consistent and of the highest quality. This ultimately helped achieve an exceptional outcome for our family”- Trevor Wilson, Director, Wilson & Bradley